Foreign Aid and Africa’s Economic Independence: The Lingering Economic Paradox for African Leaders

Introduction

Questions of how to attain and sustain economic independence have been a lingering economic paradox for as long as the concept of self-governance in most developing countries. However, for as long as the United States government kept its national coffers open for supporting several countries around the world, issues of economic independence never came to the fore. Most governments in developing countries forgot, ignored, underrated, underfunded, or poorly managed the investments in the initiatives that would improve their economic independence. Attaining and sustaining economic independence is difficult, and it would be more plausible if the US government could reconsider its decision for the very poor developing countries. But still, as aid flowed in, most developing country governments never imagined at one point that the US would consider reviewing its funding options. For as long as they kept their political and economic interests aligned with those of the US, most developing countries never imagined that a day would come when the US government would just wake up from nowhere to announce the unilateral ban on all forms of funding, financial support, or aid to all countries that had been dependent on US aid and financial assistance.

Undisrupted constant inflows of aid for decades and decades had created the mindset, thinking, and the government’s operational philosophy and culture where over-reliance on foreign aid was perceived as the acceptable form of public finance. Mentioning the expected foreign aid or promise of funding by some foreign government or international development agency as the source of funding for a particular development project had become part of the acceptable normal practice in not only most developing country governments but also societies. Of course, in the international space, countries, irrespective of whether developed or underdeveloped, are interdependent. There is no country which is self-reliant. Despite being at loggerheads with Russia, the US, just like most European countries, imports about 3% of its crude oil from Russia to help drive down energy costs. However, when a country over-relies on another, it becomes disastrous, not only economically but also politically. “Post-Colonial Economic Independence Theory” by the likes of Frantz Fanon (1976) and Samir Amin (1974) reveals that as former colonies aspire to break away from their former colonial master’s political and economic influence, the use of strategies that create independent industries is pivotal for aiding faster economic decolonisation. These must be accompanied by the prioritisation of national interests over foreign interests, as well as radical economic, social, political, governance and wealth redistribution reforms. Even if a lot of developing countries have attempted to introduce some of these reforms, later studies have confirmed prolonged political conflicts, instabilities, poor governance, and poverty to have frustrated the achievement of outcomes that could have been essential for enhancing economic independence as a precondition for decolonisation.

Yet as former colonialists dangle more attractive foreign aid and funding options in the face of their former colonies, it often becomes difficult for most African countries that are pressurised by poverty, a surging public expenditure, and protracted poor economic performance to resist the temptation of getting caught up in higher foreign aid dependency syndrome. When the purportedly great men of Africa like Kwame Nkrumah of Ghana, Jomo Kenyatta of Kenya, Julius Nyerere of Tanzania, Nelson Mandela of South Africa, Robert Mugabe of Zimbabwe, Kenneth Kaunda of Zambia, Milton Obote of Uganda, Nigeria’s Anthony Enahoro and Kamuzu Banda of Malawi, chased the colonialists out of Africa, it did not take long before they were indebted to their former colonial masters. Even when the so-called second generation of post-colonial reformers or revolutionaries like Arthur Ankrah who overthrew Ghana’s Kwame Nkrumah,  Laurent-Désiré Kabila who overthrew DRC’s Mobutu, Frederick Chiluba who replaced Kenneth Kaunda in Zambia, and Uganda’s Yoweri Kaguta Museveni attempted to rescue the situation, some African countries thrived, while others turned from bad to worse. From the day Laurent-Désiré Kabila set foot in Kinshasa, DRC has been in a quagmire for as long as no one knows when it will end. In Zimbabwe, attempts to implement reforms ended in absurdity, misery, worsening poverty, unemployment, economic hardships and hunger, as supermarket shelves became empty following the exit of white farmers. In repentance, the Zimbabwean government is now not only calling the white farmers to come back but also assessing how to raise $3.5 billion to compensate the wrongly evicted white farmers. This cyclical form of debt and higher dependence on foreign aid has raised an economic paradox that African leaders must deal with if they are to attain economic independence and freedom.

Yet, as African countries over-rely on foreign aid, Immanuel Wallerstein’s (1974) “World-System Theory” implies they move away from the core and semi-periphery of more rewarding global economic activities to the periphery, where they are over-exploited. They move to the state where they are vulnerable to signing any foreign aid agreement for as long as it would put money on the table. To good-thinking African countries, this would imply over-dependence on foreign aid should have been considered a taboo and limited to a certain extent. But as most developing countries run out of funding options, over-reliance on foreign aid cannot be avoided. It is not considered a taboo. It is not a taboo.

In fact, compared to the one who could organically explore possible new internal sources of funding, it is often a government official who has the unique talent to easily identify and negotiate new sources of foreign aid who is considered a “clever” one. It had become a normal part of the operational philosophy and norm for government officials to openly come forward and say, “We are waiting for European Union aid or for USAID to fund this and that project for our people.” This could have been a clear symptom of weaknesses, suggesting the sitting government is not thinking outside the box to creatively emerge with alternative sources of revenue and funding. But even just like the thinking in government, even the opposition or civil society organisations have often not come forward to rebuke their governments for over-relying on foreign aid.

Since the opposition also relies on foreign funding and support to survive, depending on and planning based on foreign funding is often treated as the undisputable normal system of how a government should solicit and utilize its funding. Because foreign aid easily comes in, for as long as the government is willing to adhere to the prescribed conditions and strings, dependence on foreign aid as an acceptable practice has often turned into an acceptable conventional logic. This has induced path dependence, governmental inertia and complacency that inhibit creativity and innovativeness. Because it is easier to get foreign aid, as compared to generating alternative sources of funding that do not require borrowing and begging, most developing countries’ governments have been quite reluctant to explore, identify, develop, and nurture the evolution of dependable alternative sources of development funds.

In effect, during national budget formulation, it is not uncommon to find that most developing countries’ governments have become accustomed to budgeting on the basis of frequent foreign aid inflows from the assured sources like USAID (United States Agency for International Development) and direct financial support from the other western governments. It is also not uncommon to hear from some countries like Uganda that—like the budget for the financial year 2023/2024 is UGX 52.7 trillion—it will be covered using domestic revenues and external funding or aid. Just like the rest of Africa, similar statements are also not uncommon in Kenya regarding the strategies for covering its Kshs 3.7 trillion budget. For as long as any African government never crossed the US government’s path, it was assured of getting funding. It was assured of getting aid or any form of financial support from US-related sources. But all of a sudden—boom! Donald Trump did it. Donald Trump’s government did it. Through its new Department of Government Efficiency (DOGE), the US government announced the suspension of USAID. USAID had been the formal agency through which the United States government channeled most of its funding, aid, and all forms of financial support to developing countries. Some critics view it as a neo-colonial instrument, but still, USAID has been quite instrumental for closing funding gaps in most developing countries.

America First Policy

In a bid to reduce waste and redirect funding to supporting American interests under the “America First Policy”, Donald Trump cut off all forms of unnecessary funding and aid, like the US$60 million allocated for supporting LGBTQ (Lesbian, Gay, Bisexual, Transgender, and Queer or Questioning) initiatives in Lesotho, a small Southern African country, which Donald Trump reckons “no one has ever heard of.” Even before Marco Rubio, the US Secretary of State, confirmed that USAID had been successfully disbanded, with only little finalization remaining, realities had already set in. Starting from Latin America, Asia, and Africa, governments that had hitherto planned and budgeted on the basis of funds that they did not have had to start thinking twice—if not even outside the box. At least if funding for critical healthcare issues like HIV/AIDS and other essential healthcare services had been spared, the hefty financial burdens of meeting their own development budgets would have been reduced. But this was not the case. It wasn’t the case.

In response, the ordinary global population expressed various sentiments. Others in support. Some against the new US policy decision. In these various narratives, some rational arguments have been advanced that it is now time to take advantage and stay away from neo-colonialism. Under neo-colonialism, financial aid and external funding have been used for decades as remote instruments for controlling events and policies in former colonies. In the midst of these sentiments and arguments, questions have emerged on the initiatives that would or would not improve economic independence to limit the entrenchment of neo-colonialism. Of course, if Donald Trump is out of the White House after completing his current four-year term of office, the US policy may change. The US policy may change because the new administration may think differently and come up with new insights. The new administration may reverse the existing policy. Sitting in Maryland, a US Federal Judge has so far ruled that the USAID shutdown is unconstitutional. Even if America does not know how to amend its constitution to erase such unconstitutionality, the court’s decision will not erode the fact that a harsh lesson is being learned.